Changes made last year to the Competition and Consumer Act 2010 will now protect architects against unfair contractual terms. The modified provisions will extend the unfair contract protections currently enjoyed by consumers to small businesses, including small architectural practices.
When small architectural firms are held to harsh contractual terms that could be considered unfair, these terms may be found void subject to certain conditions.
Applicable to contracts entered into on or after November 12, 2016, the new provisions cover standard form contracts given to architects with little room for negotiation. Additionally, the architect or architecture firm should meet the criteria of a small business by having less than 20 regular workers on their rolls.
The upfront price payable under the contract must not exceed $300,000 for contracts less than twelve months in duration, or $1 million for contracts exceeding twelve months.
The modified provisions of the Act do not exactly specify what types of terms will be covered under the law. Isla McRobbie, previously a practising architect but now a partner at Perth-based law firm Jackson McDonald, says there are a number of terms where the law could potentially apply.
In liability-related clauses, for example, architects are required to indemnify their contracting party for any loss or damage that the party might suffer irrespective of who is responsible for that loss. Though this isn’t unreasonable when applied to matters within their control, McRobbie says it is potentially unfair when the architects are held liable for matters beyond their control.
Termination for convenience clauses that enable project principals or head contractors to terminate the services of an architect or firm on a project without reasonable compensation may also fall under the definition of being unfair and potentially be declared void under the new protections.
Going forward, McRobbie advises architects to leverage the provisions of the new law to negotiate terms that may appear to be unfair prior to entering into a contractual agreement. Where this is not feasible, they could use the protections in any proceedings that may arise out of the architect taking action under the Act to have terms voided or invoking the new law as part of their defence in an action taken against them.
Architects in different states will be affected differently by clauses in the Act, subject to laws in their own states.
Based on an article written by Andrew Heaton for Sourceable